Just 10 percent of Americans own 91 percent of the nation’s stocks and mutual funds, according to economist Edward Wolff (Table 7). Most of the remainder is held by a “middle class” that is steadily losing ground. The bottom 60 percent is almost entirely shut out (Table 2).
Stock owners, some of whom made billions of dollars last year, can defer their income taxes indefinitely, pay a reduced capital gains tax when they decide to cash in, or pass on the capital gains tax-free to their heirs.
Making money is all a game to the super-rich — redistribution toward the top, trickle-down delusions, tax avoidance, and even, for some of them, dabbling in criminal activities. Sen. Lindsey Graham (R-SC) once said, “It’s really American to avoid paying taxes, legally…It’s a game we play…I see nothing wrong with playing the game because we set it up to be a game.” Here’s part of their game plan:
$2 of every $5 owned today was created in the last five years, most of it from the financial markets, and almost all of it going to the richest 10 percent.
Unfathomably, the richest 1 percent took anywhere from 95 percent to 116 percent of the new income gains after the recession. Yes, 116 percent, because almost everyone else went backwards. Median wealth dropped about 40 percent from 2007 to 2013.
JP Morgan CEO Jaime Dimon said, “I am not embarrassed to be a banker.” On the contrary, he and his banking buddies can sit back and gloat, knowing that not a single Wall Street banker has been prosecuted for the financial collapse, and that the little fines they pay for their misconduct simply amount to the cost of doing business.
Their crimes include faulty mortgages, lying to the U.S. Senate, and conspiring to hide billions of dollars of trading losses from regulators. The Financial Crisis Inquiry Commission used variations of the word ‘fraud’ over 150 times in describing the buildup to the crisis.
The superrich team tries to convince us that all is well. From the Wall Street Journal: The U.S. economy is on a tear. From a Moody’s analyst: Our economy is firing on most cylinders. And from President Obama himself: Tonight, we turn the page.
Even though corporate profits are at their highest level in 85 years, corporations aren’t pumping it back into the economy. Instead they’re holding it. S&P companies last year spent an incredible 95% of their profits on stock buybacks to enrich executives and shareholders.
Meanwhile, as the rest of us dutifully pay our taxes, we get blind-sided by wealthy individuals and corporations who defer their taxes, stash income in tax havens, enjoy a special capital gains tax rate, invest their money in tax-free foundations, or simply don’t pay. Boeing, Ford, Chevron, Citigroup, Verizon, JP Morgan, and General Motors, with a combined income last year of $74 billion, paid no taxes, and instead received a combined refund of nearly $2 billion.
And the Middle Class Keeps Losing
This is the middle class of a nation in which over half of public school students are poor enough to qualify for lunch subsidies.
It is a middle class so poor that almost two-thirds of polled Americans said they didn’t have enough money to cover a $500 repair bill or a $1,000 emergency room visit.
The only hope of the middle class may be for someone like Elizabeth Warren to lead it against the team of Wall Street bankers who keep winning year after year.